Detailed Analysis of Photovoltaic Cells (Part Worth Collecting) - Section Three
III. Analysis of Mass Production Status and Future Trends of Photovoltaic Cell Technologies
A. Analysis of Mass Production Status of Different Technological Routes
Logic of PV Cell Technology Mass Production
Based on previous analyses, N-type batteries exhibit superior technical parameters compared to PERC batteries, yet they also face higher production costs. For photovoltaic companies, the decision to invest in a new technology largely depends on whether downstream power plants can accept the new technology at a higher price, ensuring the company's breakeven point and potentially achieving greater profitability than the existing technology. The willingness of downstream power plants to pay a premium for new technologies primarily stems from the enhanced performance of these new products, which can aid in improving investment returns (IRR). In summary, the superior technical parameters of N-type battery technology are reflected in higher conversion efficiency and bifacial rates, as well as lower degradation rates and temperature coefficients. These indicators can enhance investment returns by reducing power plant investment costs and increasing electricity generation over the entire lifecycle.
Reducing investment costs for power plants primarily refers to the higher overall output power brought by new technologies' improved conversion efficiency, bifacial rates, and lower temperature coefficients. This leads to a dilution of the BOS (Balance of System) costs associated with land and supporting structures, which are closely related to area. Therefore, under unchanged internal rates of return, power plants are willing to pay a premium for new technologies. According to relevant studies, an increase of 30W in unit module power could reduce domestic BOS costs by approximately 0.07-0.09 RMB/W. Given that overseas power plant investments often incur higher BOS costs, estimates suggest that a 30W increase in unit module power could lower BOS costs in the U.S., Italy, and Australia by approximately 0.099, 0.045, and 0.033 USD/W, respectively.
The increase in the total electricity generation over the lifecycle of the power plant primarily results from the slower degradation rate of cells with new technology, which boosts annual electricity production. With IRR remaining constant, this allows for a reduction in the initial installed capacity of the power plant, thereby lowering investment costs. Assuming an IRR of around 6%, a 25-year lifecycle, and an annual utilization of 1200 hours, with electricity prices between 0.3-0.35 RMB/kWh, calculations show that upgrading from a PERC battery with a first-year degradation of 2% and a linear degradation of 0.5% to an N-type battery with a first-year degradation of 1% and a linear degradation of 0.4% could result in a cost reduction of approximately 0.83-0.97 RMB/W. Considering that electricity prices overseas are higher than in China, it is theoretically possible for components in overseas markets to achieve a higher premium due to increased generation.
In summary, the current performance metrics of various battery technologies are as follows: TOPCon batteries achieve a mass production efficiency of about 25.3%, a bifacial rate of around 85%, a temperature coefficient of -0.3%/°C, a first-year degradation of 1%, and a linear degradation of 0.5%; HJT batteries reach a mass production efficiency of about 25.5%, a bifacial rate of around 90%, a temperature coefficient of -0.24%/°C, a first-year degradation of 1%, and a linear degradation of 0.3%; Longi Green Energy's HPBC batteries achieve a mass production efficiency of approximately 25.3%, a temperature coefficient of -0.29%/°C, a first-year degradation of 1.5%, and a linear degradation of 0.4%; Aiko Solar's ABC batteries reach a mass production efficiency of about 26.5%, a temperature coefficient of -0.24%/°C, a first-year degradation of 1%, and a linear degradation of 0.35%. Based on these metrics, current estimates indicate that TOPCon, HJT, HPBC, and ABC batteries have market premiums in China of approximately 0.2-0.24 RMB/W, 0.28-0.34 RMB/W, 0.14-0.17 RMB/W, and 0.26-0.32 RMB/W, respectively. Considering the battery production costs mentioned above, TOPCon and HJT batteries are expected to achieve excess profits in China of up to 0.16-0.2 RMB/W and 0.19-0.25 RMB/W, respectively.
From a purely technical perspective, the current bifacial rates of BC batteries remain relatively low, not significantly outperforming other battery routes. However, Longi and Aiko believe that with technological advancements, the bifacial rates of BC batteries could exceed 65-70%. Moreover, BC batteries possess other advantages over different battery routes, notably aesthetic appeal. With no grid lines obscuring the front surface, BC modules are more popular in the overseas distributed market and can command additional product premiums. If the back sheet and frame are also made from black materials, a fully black module with superior aesthetics can be achieved. According to feedback from Longi Green Energy, their HPBC product garners a premium of over 1 cent/W compared to TOPCon products.
Regarding market acceptance, statistics show that as of September 2021, the first inclusion of N-type components in domestic state-owned enterprise ground station component tenders marked a significant event, with the total tendering scale expected to reach 4.55GW by the end of 2022, accounting for about 4%. From April to July this year, the monthly tendering scale for ground station projects featuring N-type components reached 4.7GW, 4.5GW, 4.4GW, and 5.3GW respectively, with N-type components accounting for approximately 24%, 26%, 33%, and 39% of the total P/N ratio. This indicates a clear and continuous increase in acceptance of N-type components by end-users. In overseas markets, the benefits brought by N-type batteries are more pronounced, with their share in some orders rising to 60-80%.
On the pricing front, according to Infolink, the mainstream selling prices of TOPCon, HJT, and XBC components can command premiums over PERC components of approximately 0.1 RMB/W, 0.2 RMB/W, and 0.15-0.4 RMB/W, respectively. As N-type technology continues to advance, there is a possibility that the sales premiums for N-type components could expand further.
Currently, TOPCon battery cells are priced approximately 5 cents/W higher than PERC cells, while TOPCon modules and HJT modules command premiums of about 7 cents/W and 26 cents/W over PERC modules, respectively. Compared to our calculated premium space, the current premium level of TOPCon products is significantly lower than what we estimate, and HJT is nearly on par with our calculated lower limit. We believe that the recent price drops in PERC products have also led to a reduction in the premium levels for N-type batteries and modules, while the competition for TOPCon products has intensified, forcing some manufacturers to forgo some profits in exchange for higher shipments. However, overall, the current premium levels are still sufficient to cover the cost increases of leading companies, indicating that enterprises with technological advantages can create a more favorable competitive environment for themselves, thereby securing greater profitability.
In view of the current performance, pricing, and cost situation of N-type batteries, we believe that whether it is TOPCon, HJT, or BC batteries, the premium levels they acquire in the market are already sufficient to cover their respective cost increases (with BC batteries mainly relying on the overseas distributed market). Taking TOPCon as an example, the current battery premium is around 9 cents, and after accounting for depreciation costs, the net profit per watt is about 12 cents, allowing for the return on production line investment within a year and a half, much faster than in other manufacturing sectors. Thus, battery manufacturers are strongly motivated to expand production. In the future, all technological routes will continue to push for cost reduction and efficiency enhancement, with enterprises that possess leading performance and cost metrics likely to achieve higher excess profits.
Statistics on Photovoltaic Cell Expansion
(1) TOPCon
Among various battery technology routes, TOPCon has the closest integration with PERC battery processes, requiring the least effort to overcome technological difficulties, which is why it was the first to achieve cost-effectiveness and initiate mass production. According to Infolink and TrendForce statistics, by 2022, the global production capacity of TOPCon batteries reached approximately 81GW, with major players being Jinko Solar (24GW) and Junda Co. (8GW). Based on the announced industry-wide expansion plans, it is expected that by 2023 and 2024, the cumulative capacity of TOPCon across the industry could exceed 500GW and 900GW, respectively.
From the supply perspective, the number of enterprises capable of stable mass production is currently limited. Rough estimates indicate that as of the end of May, the production capacity of TOPCon batteries was around 120GW, with full production capacity at approximately 70GW, which is relatively tight compared to the market's annual demand expectation of around 400GW. Considering that the supply chain cannot meet all industry demands in the short term, and that high-quality production capacity may be prioritized for overseas markets with higher prices, TOPCon products are likely to maintain a high level of profitability for a considerable period ahead. Based on the effective supply capacity of 120GW, it is estimated that the market penetration of TOPCon products will approach 30% in 2023. By 2024, TOPCon is expected to surpass PERC, becoming the new mainstream technology in photovoltaic cells.
From the positioning of leading battery/module manufacturers, Jinko and Junda, as leaders in the LPCVD route, are expected to achieve nominal capacities of 60GW and over 30GW, respectively, by the end of 2023. Tongwei and Trina Solar, following the launch of their first GW-level production line in the fourth quarter of 2022, have nearly reached production targets and are accelerating subsequent capacity deployment, aiming for over 20GW in nominal capacity within the year. JA Solar and Canadian Solar, while slightly delayed in their initial production capacity investments in the second quarter of 2023, are swiftly catching up and are on track to reach over 30GW this year.
At present, pursuing TOPCon has become the optimal choice for mainstream photovoltaic battery and integrated manufacturers. However, as companies accelerate their capacity realization, some have encountered issues with yield rates, efficiency, and costs, resulting in actual operational progress significantly lagging behind expectations. Generally, leading manufacturers such as Jinko and Junda have made faster progress in capacity investments than anticipated, leading the industry by 6-9 months. Thanks to their efficiency and cost advantages, their net profits range between 0.06-0.07 RMB/W, exceeding the profits of second and third-tier manufacturers by around 0.03-0.04 RMB/W.
Considering that TOPCon technology is still in its initial industrialization phase, it is expected to reach maturity within 1-2 years, during which leading companies are likely to enjoy the first-mover advantage in profits and shipments. With continuous efficiency upgrades of TOPCon technology, this leading advantage may persist in the long term.
(2) HJT
Regarding HJT, according to Solarzoom, the cumulative production capacity of HJT batteries exceeded 11GW by the end of 2022. The cost reduction breakthroughs for HJT are primarily dependent on the introduction of the 0BB+ silver-plated copper technology in the latter half of this year, and thus the previously announced expansion plans are mainly concentrated among a few leading companies in the industry. Based on the announced expansion plans, it is projected that the nominal capacity of HJT in the entire industry could reach 60GW in 2023 and grow to 102GW in 2024. Most of the companies choosing the HJT route are new entrants, while traditional leading battery/module manufacturers are primarily focusing on small-scale technological R&D.
From the market participants' perspective, the concentration of HJT battery production capacity is relatively high, with a CR5 of over 60%. Among them, Huasheng New Energy and East Solar aim to achieve target production capacities of around 20GW in 2023-2024, while other companies have set their targets at several GW levels. Huasheng New Energy has emerged as a dark horse in the HJT battery field, completing the construction of 500MW HJT mass production capacity and efficiency improvements in a short time, establishing influence in the industry, leading technological transformation, and accelerating cost reduction and process debugging.
Currently, the TOPCon technology route has taken the lead due to its cost advantage, prompting leading crystalline silicon component manufacturers to focus on expanding TOPCon production capacity in the tens of GW range. Nevertheless, several companies have synchronized plans for small GW-level HJT pilot lines, maintaining close monitoring of the HJT route. We believe this is driven by two factors: first, closely tracking the production potential and marginal changes of efficiency-enhancing cost-reduction routes such as 0BB+ silver-plated copper and copper electroplating; second, preparing for the mid-to-long-term combination of HJT and perovskite to drive photovoltaic technology into the next platform.
(3) XBC
With Longi Green Energy and Aiko Solar continually ramping up BC production capacity and the increasing experience in large-scale mass production, it is expected that by the end of 2023, the total industry capacity for XBC batteries could reach nearly 60GW, a significant increase from 11GW at the end of 2022. Longi's HPBC capacity and Aiko's ABC capacity will each account for about half of this.
Currently, companies such as Jinko, JA Solar, Tongwei, and First Solar, which primarily focus on the TOPCon technology, also have BC pilot lines in reserve. Other companies involved in the XBC route include Trina, Junda (Jietai), Jinshi, Rituo Photovoltaic, Hengdian Dongci, Zhonglai, and Zhengtaixin Energy, all of which have made varying degrees of investment. From the layout of various manufacturers, BC, as a compatible technology, is expected to attract continuous resource investment across the industry.
B. Outlook on Photovoltaic Cell Technology Trends
Upgrading Routes for N-type Battery Technology
In the case of TOPCon batteries, the current mass production efficiency is around 25.3%, which still has some distance from the potential efficiency limit. Future efficiency improvements for TOPCon batteries may follow three main paths: (1) Increasing the SE structure on the front side: The SE structure is already widely utilized in PERC batteries, and the new domestic TOPCon production capacity introduced in the second half of 2023 is expected to incorporate the SE structure. By the end of the year, incorporating this structure may enhance battery efficiency to over 25.7%; (2) Using laser sintering to optimize the battery grid structure: In the metallization phase, treating the metal paste on the front side of the silicon wafer via the laser sintering process can improve the ohmic contact between the paste and the silicon wafer, enhancing contact resistance and potentially achieving a battery efficiency gain of around 0.2%. Currently, various laser manufacturers (such as Dier Laser, Haimuxing, Dazhong Laser, Delong Laser, etc.) have collaborated with paste manufacturers and battery manufacturers (like Jinko Solar, Jietai Technology, Zhonglai, etc.) for related production line layouts; (3) Bifacial passivated contact structures: Compared to current single-sided passivated contact battery structures with an efficiency limit of only 27.1%, the theoretical efficiency of bifacial polycrystalline TOPCon can reach 28.7%, with mass production efficiencies expected to exceed 26%. As an important direction for future TOPCon efficiency enhancement and cost reduction, manufacturers are actively conducting R&D. Leading manufacturers' bifacial passivated contact production lines are expected to be launched in 2024, gradually entering larger-scale production post-2025.
For HJT batteries, key future events include the introduction of 0BB+ silver-plated copper, the industrialization of lower indium materials, and copper electroplating technology. With the gradual introduction of the 0BB+ silver-plated copper scheme into mass production later this year, copper electroplating has become the next significant efficiency enhancement route explored by the industry. Given that photovoltaic silver accounts for about 30% of industrial silver, as the industry demand progresses towards TW levels, fluctuations in silver prices may bring greater impacts on the non-silicon costs of photovoltaic batteries. Copper electroplating aligns with the industry's trend of reducing silver usage, providing solutions to the rising costs of silver in the TW era. Based on current progress and manufacturer orders, it is expected that 3-4 pilot lines for copper electroplating will be established in the second half of 2023, focusing on the production and debugging situations of companies like State Power Investment, Tongwei, and Haiyuan Composite.
For BC batteries, the core of technological development lies in how to manage the significant increase in process complexity and precision requirements, wherein yield rates and cost optimization directly impact the scaling rhythm and profitability of the XBC technology route. Currently, methods such as screen printing and laser etching have their own advantages and disadvantages regarding precision, production efficiency, and silicon wafer damage, leading companies to seek a balance by adopting different process routes. In addition to Longi Green Energy and Aiko Solar, which have already achieved mass production, the BC route is expected to become an upgrade direction for both TOPCon and HJT battery technologies in the future.
Prospects for Perovskite-Silicon Tandem Cell Technology
Cost reduction and efficiency enhancement have always been the iterating upgrade direction for solar cell technology. The first-generation crystalline silicon solar cell technology maintains the industry's mass production efficiency record and is currently the mainstream technology, but the room for efficiency enhancement and cost reduction is gradually diminishing. The second-generation inorganic thin-film solar cell technology boasts significant theoretical advantages (in terms of efficiency and cost), but operationally, it faces challenges such as low defect tolerance and limited material availability, restricting its mass production performance. The third-generation perovskite solar cell technology not only has higher theoretical efficiency and cost advantages but is also more feasible for practical implementation. It is expected to become a viable alternative once crystalline silicon cells reach their performance limits. The combination of perovskite battery technology with crystalline silicon to form perovskite-silicon tandem cells holds the promise of further breaking through the efficiency limits of single-junction batteries, attracting considerable attention from the industry.
Perovskite materials refer to compounds with a highly symmetrical cubic structure and can be represented by the chemical formula ABX3. The ABX3 perovskite materials used in photovoltaics are composed entirely of elements commonly found in nature, making their large-scale manufacturing unconstrained by raw material availability. Perovskite materials possess unique semiconductor properties that allow for higher theoretical conversion efficiency (with a limit of up to 33%) and lower theoretical production costs (high defect tolerance reduces material purification costs, and excellent light absorption coefficients lower material usage). Between 2009 and 2019, perovskite technology achieved a breakthrough in laboratory conversion efficiency beyond 25% in just ten years, a feat that took crystalline silicon solar cells over sixty years to accomplish; currently, the highest single-junction conversion efficiency has reached 25.7%, and the efficiency of perovskite-silicon tandem cells has exceeded 31.3%.
Perovskite-silicon tandem cells combine perovskite and crystalline silicon semiconductor materials, layered by bandgap width from small to large, and by spectral bands from long to short, allowing the shortest wavelengths to be utilized by the outermost wide-bandgap material and longer wavelengths to pass through to be utilized by the narrower bandgap material. This configuration minimizes energy losses due to carrier thermal relaxation in single-junction batteries and broadens the solar spectrum utilization, aiming for a theoretical conversion efficiency limit exceeding 46%.
The theoretical efficiency limits and low-cost potential of perovskite technology have been widely recognized in the industry. However, two major challenges remain as it gradually enters mass production: first, the capacity utilization and product yield in large-scale production; second, the stability of perovskite components' operational performance. From a short-term perspective, perovskite technology remains unlikely to displace existing crystalline silicon cells. However, actively embracing the mature crystalline silicon industry and developing perovskite-silicon tandem cells could enhance the efficiency of crystalline silicon cells, potentially becoming a feasible pathway for the industrialization of perovskite technology.
Currently, in the practical applications of tandem cells, the perovskite-HJT tandem has seen the most implementation, primarily due to the short preparation processes of HJT, simple modifications, and its thin-film deposition techniques that can match perovskite cells. Additionally, HJT cells have a high efficiency ceiling. The main challenge facing perovskite-silicon tandem cells lies in how to deposit films on the textured pyramid structures of heterojunction surfaces (typically on flat conductive glass). Wet coating methods have yet to achieve high-efficiency deposition, making vacuum deposition the preferred choice in this field.
The acceleration of new technology industrialization often requires the collaborative participation of enterprises across various segments of the manufacturing, equipment, and end-user industries. Notably, the engagement of participants from the crystalline silicon technology route in perovskite investment further highlights the potential of new technologies. Recently, integrated crystalline silicon manufacturers have begun advancing MW-level pilot lines for perovskite-silicon tandem cells, promising to accelerate the industrialization process of perovskite technology.
IV. Market Landscape
A. Industrial Impact of Technological Iteration
Reflecting on the impact of the PERC battery replacement cycle on the industry, it has primarily manifested in two aspects: first, companies focusing on PERC industrialization achieved significant excess returns; second, cost-advantaged enterprises were better motivated to accelerate expansion amidst the overall technological transformation of the industry, influencing the evolution of industry dynamics. Taking Tongwei Co. as an example, the company began to make breakthroughs in PERC battery technology from 2016 onwards and subsequently expanded capacity rapidly in line with industry trends. By the end of 2018, the second and third phases of the Chengdu project, along with the second phase of the Hefei project, were successively put into operation, solidifying the company's leading position in the battery segment.
While expanding capacity, the company has continuously optimized processes and fine-tuned management to reduce production costs, reaping excess profits during the early penetration of PERC batteries. In 2019, the company's battery business gross margin reached 20.33%, leading the industry.
Compared to the previous PERC battery iteration cycle, this round of technological cycles has some differences: first, the photovoltaic industry has matured further, with the main capacity expansion in the battery segment not only involving specialized battery manufacturers but also integrated component companies, as well as numerous cross-industry firms attempting to leverage N-type battery technology to enter the photovoltaic industry; second, the N-type technology route is diverse. While the replacement of P-type with N-type is a certainty, the future evolution of various N-type technology routes and the ultimate market structure remain undetermined.
B. Market Structure
According to CPIA statistics, prior to 2022, new battery production lines were predominantly PERC lines. Starting in the second half of 2022, some N-type battery capacity began to be released. In terms of shipment, the total output of crystalline silicon batteries in China reached approximately 318GW in 2022, a year-on-year increase of 60.7%, with the top five companies accounting for approximately 56.3% of production. Among the 17 companies with output exceeding 5GW are specialized battery manufacturers such as Tongwei, Aiko, and Junda (Jietai), as well as integrated component manufacturers such as Longi Green Energy, Jinko Solar, JA Solar, and Trina Solar.
From a technological standpoint, the market share of PERC batteries in 2022 was around 88%, while the combined market share for N-type batteries reached approximately 9.1%. Among them, TOPCon batteries accounted for about 8.3%, HJT batteries for approximately 0.6%, and BC batteries for around 0.2%. Due to demand for cost-effective BSF products in some overseas markets (such as India and Brazil) and limited domestic niche markets (such as solar street lights), the market share of BSF batteries was around 2.5% in 2022.
Considering the supply and capacity rollout of N-type batteries in 2023, we estimate that the total supply of N-type batteries could reach around 140GW. Based on global battery shipment estimates of 477GW, the market share of N-type batteries could reach approximately 30%. By 2024, the market share of N-type batteries is expected to exceed 50%.
In terms of company capacity layouts and mass production status, it is noted that leading battery manufacturers and integrated component manufacturers are basically involved in the TOPCon route, while HJT and BC routes remain relatively niche. The capacity for the HJT route is primarily contributed by the photovoltaic dark horse Huasheng New Energy and the integrated component manufacturer East Solar, while the BC route capacity is still dominated by battery leader Aiko and component leader Longi Green Energy. It is anticipated that from 2023 to 2024, as N-type battery technology gradually becomes mainstream, leading companies will maintain their advantages in performance metrics and cost performance, resulting in sustained industry concentration.